Read this before taking up funeral cover

South Africans could see the average cost of burying a loved one rise significantly over the next few months. On average the cost of burial is estimated between R30,000 and R40,000, this according to Lee Bromfield, CEO of FNB Life, who adds that the expected increase in burial costs will likely be in line with the rising living costs.

Bromfield explains that this average cost takes into account standard expenses such as the purchase of a coffin, catering, hiring a tent, buying a headstone, travel expenses for the family and even the amount of electricity consumed while preparing for the funeral. It adds up further, with the cost of placing the obituary, printing of the obituary and programme and even the cost of following up with providers and family members coming from far.

No surprises then that, if not planned for, a funeral can place significant financial strain on a family, leaving the family in debt and even preventing them from having the burial they hoped for. In light of the ever-increasing cost it is vital that South Africans take up a funeral plan to avoid excessive debt impacting on the family years after the burial has taken place.

Effective planning is vital

Bromfield advises that the best way to deal with high funeral costs is to plan accordingly. If you do not have cover in place you need to take up adequate cover to protect your loved ones. Alternatively review existing cover (do so regularly) to ensure that it still meets the needs of your growing family. Once the cover is in place it is vital that you keep up monthly payments diligently, missing a premium could mean that you are not covered should anything happen during the month or months you are missing payment.

Just as important as having cover in place is selecting the right provider and ensuring that the benefits of the plan match the costs. In spite of regulations, many consumers continue to be exploited by unscrupulous, bogus funeral cover providers.

Bromfield cautions that consumers struggle to make the best decision due to, especially the large number of providers claiming to offer reliable funeral cover, as well as the ease of applying due to digital advancement. “Digital channels continue to simplify and broaden access to various financial products including funeral plans. Nowadays, taking up a funeral plan is quick and easy as people can conveniently use their mobile devices or computer, and be covered in minutes,” explains Bromfield, adding that people often take up easily available plans but ignore the potential dangers of not being paid-out when claiming. “Unfortunately most people tend to only realise that they are being exploited when they are under pressure to pay for a burial. By then, it might be too late,” says Bromfield. “Those who are lucky enough to even locate the said insurer are usually sent from pillar to post, spending more money trying to get their pay-out.”

Bromfield has the following tips to minimise your risk when taking up funeral cover:

#1 Understand the details

When applying for a funeral plan, be it face-to-face with an employee of your chosen insurer or through some more convenient digital platform, you need to ensure that you read and understand all details carefully and that your personal details are taken down correctly.

It is also important that you ask questions about elements of the cover you may not understand fully, you should be able to ask all the questions that are important to you. A reputable provider will answer transparently. You should apply caution when it comes to those who are not forthcoming or ignore your questions.

#2 Protect your personal details

Under no circumstances should you share your banking or personal details before accepting the offer. Be suspicious of providers that insist on disclosure of your banking details before you have accepted an offer.

#3 Do your homework on the provider

Knowing your chosen insurer’s service track record and how they treat customers is very important. It will give you insight into the provider’s ability to deliver when you need to claim. Speak to others you know who may have done business with the company, or simply Google the name of the provider as this will give you the information you need.

#4 Don’t be swayed by worthless value-adds

You should base your decision on whether or not the chosen cover takes care of your needs, real value lies in the pay-out, that should be your focus. Do not be swayed by add-ons that do not add real value and simply pushes up your monthly premium. Value add-ons are things such as accidental death benefit for you and your spouse.

#5 Pay-out vs Premium

A good funeral plan will offer you a balance between what you pay (your monthly premium) and the eventual pay-out. If the plan looks too good to be true, in other words, it offers fantastic funeral benefits at a small cost you should investigate carefully.

At the same time though, you need to keep in mind that the monthly premium needs to be affordable, especially if you plan on insuring multiple family members. The best is to take up a funeral plan that you can comfortably afford, from a reputable insurer who will not make you jump through hoops for a pay-out in your time of need.

#6 Efficiency and ease of the claims process.

The speed at which the pay-out is finalised is vital as not many people have the cash on hand to pay for a burial while waiting for the funeral cover to pay-out. This becomes especially important in the case of a sudden death of a loved one. Most providers will state that they pay within 48 hours but then list the large number of documents required, suggesting that pay-out may not be ready within the stipulated 48 hours.

The most important document is the notification of death form, basically stating the cause of death. Your best defence is to ask the insurer to explain the claims process to you before taking up cover. Be careful of insurers that ask for the submission of numerous documents that have little or nothing to do with your claim. It is very important that you familiarise yourself with the terms and conditions.

Regardless of the channel you use to take up a funeral plan or the providers you are interested in, it is important that you know what you require. Ask questions when you are unsure and demand to see and fully understand the terms and conditions and policy documents before agreeing to the cover. You need to pay careful attention to all details of the plan to avoid future heartache and stress during an already emotionally draining time.

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Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart.
Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.